Wellness programs: A good way to save money

Amy Fontinelle picture

Obamacare is the big news in health care, but there’s another huge story out there: how employers who offer private health insurance are changing their benefits.

I get my insurance through my husband’s employer, and I pay less and get better coverage than I would by purchasing an individual policy on the Affordable Care Act exchange.

Yet our household’s policy, like virtually all health insurance policies, becomes more expensive each year. And since the company pays about 85% of its employees’ premiums, it has sought a way to lower its costs.

Growth of financial incentives

Percentage of large employers that provide financial incentives in their health management programs.

Source: Mercer's National Survey of Employer-Sponsored Health Plans.

Year Percentage
2010 27%
2011 33%
2012 48%
2013 52%

So the company — like many other employers — has adopted a "carrot" approach to saving money on health insurance premiums, and it has offered to share its cost savings with employees.

Employees and their spouses/domestic partners can choose to pay the full price of their 15% share of premiums. Or they can participate in a wellness program to get a discount.

There are two levels of participation in our program. The discount is $10 per family member per month for meeting the lower healthy living requirementand $20 per family member per month for meeting higher standards.

As a result, my husband and I will save $480 on our 2014 premiums.

This program has been in place for three years, and each year the company has set the bar higher for earning the discount.

In the first year, we simply took an online health assessment to earn the full discount. And much of what we were asked to provide wasn't mandatory. So if we didn't want to share weight or blood pressure information, for example, we weren't required.

Still, some questions felt awfully personal: How did we rate our performance at work? How often were we nervous or depressed? We could answer however we liked, and we didn’t have to prove anything.

During the second year, we had to do things like log our workouts and our annual physicals to earn the full discount, in addition to completing the same health assessment. Again, though, no proof required.

Now, in the third year, it’s become significantly more difficult to earn the maximum discount.

We were still able to earn the full discount with user-supplied information as we did in the second year, but an easier way would have been to submit our choice of verified information.

For example, you can link your gym account with your wellness program account so it knows when you’ve been working out. You can wear a heart monitor that lets you upload data showing how much your workout elevated your heart rate and for how long. You can have a trainer evaluate your fitness and submit the results to the program. You can submit biometric information about your blood pressure, cholesterol, fasting glucose levels and other health markers.

I suspect that in the fourth year, we’re going to have to start handing over information that’s verified by our doctors, our gyms and our devices to earn the full discount.

It makes sense for companies to base rewards on verifiable activities. Giving employees discounted health insurance premiums if they aren’t really doing things to improve their health — just saying they are — isn’t going to save the company money.

But what are the implications of telling a company that’s closely connected with your employer how healthy you are?

The wellness program administrator assures me our health information will not be shared with my husband’s employer. In fact, the administrator is legally required to protect this information. The employer will only know whether we've done enough to earn a discount.

But the administrator does share aggregate information so my husband's employer can see how much risk it faces based on the overall health of its workforce. Shared data also can help the employer evaluate whether the wellness program is accomplishing anything.

We’re assuming the protection of our health information between the wellness program and the employer is similar to using our insurance to go to the doctor. Employers don’t get access to that information despite paying the bulk of employees' health insurance premiums.

But there’s always some risk when you share personal information online, which is how this program is administered. A worst-case scenario might entail being passed over for a promotion because your employer has learned that you’re less healthy than you appear to be.

In future years, if the program continues to require us to provide greater details about our health, we might think twice about the potential risks and whether they’re worth the savings.